COPENHAGEN: Lego’s sales of its colorful plastic bricks outpaced the overall toy market in the first half of the year, driven by strong demand in Europe and North America, the Denmark-based toymaker said on Wednesday. The surge in Lego’s sales contrasts with a stagnating global toy market and tepid sales for rivals such as Barbie-maker Mattel and Hasbro, the firm behind My Little Pony.

The family-owned Lego company said sales from January through June rose 13 percent to 31 billion Danish crowns ($4.65 billion). By comparison, Lego increased first-half sales by 1 percent last year and 17 percent in 2022, year over year. “We have performed significantly better than the overall toy market and have grabbed market share at a fairly high pace,” CEO Niels Christiansen told Reuters.

The global toy market has stagnated this year following a 7 percent decline in sales last year, he said.

Lego’s operating profit rose 26 percent to 8.1 billion crowns. Following the strong start to the year, Christiansen now expects double-digit sales growth in 2024, compared with earlier guidance of single-digit growth. The company plans to open around 100 stores this year, slightly fewer than in previous years, bringing the total number of stores above 1,100. “We are opening slightly fewer stores in China right now because we see that consumers there are holding back a bit,” Christiansen said.

Instead, the company has shifted focus to Europe and North America, where it is seeing strong demand. Lego Icons, which includes models of the Eiffel Tower and Titanic, was among the best-performing themes along with City, Technic and Star Wars.

Meanwhile, Lego said it was on track to replace the fossil fuels used in making its signature bricks with more expensive renewable and recycled plastic by 2032 after signing deals with producers to secure long-term supply. Lego, which sells billions of plastic bricks annually, has tested over 600 different materials to develop a new material that would completely replace its oil-based brick by 2030, but with limited success.

Now, Lego is aiming to gradually bring down the oil content in its bricks by paying up to 70 percent more for certified renewable resin, the raw plastic used to manufacture the bricks, in an attempt to encourage manufacturers to boost production. “This means a significant increase in the cost of producing a Lego brick,” CEO Niels Christiansen told Reuters.

He said the company is on track to ensure that more than half of the resin it needs in 2026 is certified according to the mass balance method, an auditable way to trace sustainable materials through the supply chain, up from 30 percent in the first half of 2024. “With a family-owner committed to sustainability, it’s a privilege that we can pay extra for the raw materials without having to charge customers extra,” Christiansen said.

The move comes amid a surplus of cheap virgin plastic, driven by major oil companies’ investments in petrochemicals. Plastics are projected to drive new oil demand in the next few decades.

Lego’s suppliers are using bio-waste such as cooking oil or food industry waste fat as well as recycled materials to replace virgin fossil fuels in plastic production.

The market for recycled or renewable plastic is still in its infancy, partly because most available feedstock is used for subsidized biodiesel, which is mixed into transportation fuels.

According to Neste, the world’s largest producer of renewable feedstocks, fossil-based plastic is about half or a third of the price of sustainable options. — Reuters